RUPSA Sacco has petitioned the High Court to place the Kenya Union of Savings and Credit Co-operatives (KUSCCO) under insolvency proceedings, citing severe financial distress that it says meets the threshold under the Insolvency Act.
The matter is before the High Court’s Commercial and Tax Division, where RUPSA has asked judges to dismiss KUSCCO’s preliminary objection. According to the petitioner, the objection raises both factual and legal questions that cannot be resolved without a full hearing.
At the heart of the dispute is whether KUSCCO, registered as a cooperative society, can legally be subjected to insolvency proceedings. RUPSA argues that KUSCCO’s corporate status, ownership structure, and extensive network of subsidiaries make it eligible.
Court filings note that KUSCCO is a body corporate under section 4(1) of Cap 490, with “Limited” in its name by law, and therefore falls within the scope of the Insolvency Act.
The petitioner points to audit findings and statutory demands showing that KUSCCO’s liabilities far outweigh its assets. Documents presented to the court indicate liabilities of Sh17.7 billion against assets of Sh5.2 billion, leaving a deficit of about Sh12.5 billion.
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Further, RUPSA references remarks made by Cooperatives Cabinet Secretary Wycliffe Oparanya before the Senate, where he revealed that approximately Sh13 billion had been lost at KUSCCO and raised concerns about its financial reporting practices.
The submissions also highlight ongoing criminal proceedings against former KUSCCO officials accused of fraud-related offences tied to the cooperative’s financial troubles.
RUPSA insists that only a court-appointed insolvency practitioner would have the authority to investigate KUSCCO’s dealings, including billions in intercompany loans and its interests in five subsidiary firms.
KUSCCO, through its preliminary objection, is challenging both the court’s jurisdiction and the applicability of the Insolvency Act to cooperative societies. The High Court will now decide whether the objection can be determined purely as a matter of law or whether the case must proceed to a full hearing.
By Masaki Enock
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